Article by Phil
According to research by Paragon, one in three grandparents are financially supporting their grandchildren’s education with help from their pension money saving expert.
Either by helping with general expenses, uniforms, books etc or directly paying for tuition fees. Over 70% are contributing to university fees and expenses. Over 70% of grandparents say they are happy to provide the support and want help their grandchildren to get a better education.
- 30% are paying between £1,000 and £5,000.
- 16% between £5,000 and £10,000 and:
- 14% over £10,000 a year.
- Over 50% said the help didn’t have any financial impact on them.
- But 8% did say that it was causing a strain on their own finances.
It seems from these figures that a good percentage of grandparents have secure retirement incomes with help from their pension money saving expert.
Some will no doubt have draw down arrangements, others may have guaranteed income from their pensions or annuities. The number of annuities is certainly on the increase, with numbers up 60% between 2022 And 2023 according to iPipeline. With the average pension pot being £223,000.
Although not everyone has it so good of course. Less than 30% of women can afford to save £100 a month according to Schroeders.
Although withdrawals from pensions are increasing.
The number of first-time withdrawals from pensions increased by 20% on the previous 12 months according to HMRC. Some of this money might be being withdrawn to support grandchildren of course. Others might be concerned about the new government changing the pension rules in the upcoming budget. Whatever the reason, worryingly only 30% of people are taking financial advice from a pension money saving expert before making a first-time withdrawal.
Especially when Pension Bee found that over the last 5 years some pensions were growing at an average of 8% per year (for pensions 30 years from maturity).
This tends to benefit men more than women, according to research by Royal London. That’s because on average women’s pensions are worth 40% less than their male counter parts by the time they reach 55. The gap is only 15% in their 30’s but widens quickly as women take time out of their careers to have children. As if this is not bad enough, thousands of women have also been underpaid in their state pensions stretching back over 20 years. So many are involved that the parliamentary Ombudsman has now launched an investigation.
It’s not just tax-free cash withdrawals that are on the rise ahead of the budget. According to Hargreaves Lansdown their customers were worried about the budget and as a result:
- 20% planned to open a cash ISA.
- 18% a stocks and shares ISA
- Whilst 17% said they were going to pay more into their pension to benefit from tax relief in case it was withdrawn.
- Then 16% said they were going to withdraw their tax-free cash.
Poor pension planning still a problem.
According to Barnett Waddingham’s research (Money Marketing 10th October). People aged between 40 and 55 are woefully unprepared for their retirement and need to see a pension money saving expert. The survey found that:
- Only 12% had a clear budget for their retirement income.
- 16% had not started planning for their retirement but were “thinking” about it, and
- 13% had no plans for their retirement at all.
- Despite that nearly 40% wanted to spend more time travelling when they retire and
- 20% want to move somewhere new.
UK Millionaires on the move
According to the Adam Smith Institute 4.5% of people in the UK are millionaires. That’s one in twenty people. How many do you know? But they are predicting that this will fall dramatically to 3.6% over the next four years. This will be as a direct result of threats to increase tax on higher net worth individuals including the much publicized “non-doms”. This can only be bad news for the UK and for ordinary taxpayers. Less millionaires means everyone else will have to pay more tax.
